States begin preparing for expansion of Medicaid

In 2013, states will prepare for implementation of the Patient Protection and Affordable Care Act.

In 2013, states will prepare for implementation of the Patient Protection and Affordable Care Act.

The ACA would expand Medicaid beginning in January 2014 to nearly all adults with incomes up to 133 percent of the federal poverty level ($14,856 per years for an individual in 2012).

The Congressional Budget Office estimated that this could add 17 million new enrollees to Medicaid by 2016. Each state must decide how and when to implement the expansion of Medicaid.

National issues, such as the federal budget deficit, will impact how each state implements the ACA. The Congressional Budget Office reports that federal Medicaid spending on long-term care will grow from $73 billion in 2012 to $1.48 trillion in 2021.

House Bill 6300, titled the "Medicaid Long-Term Care Reform Act of 2012," was introduced in August 2012 "to provide adequate technical assistance and other support to states for long-term care partnership programs, and for other purposes."

One of the bill's findings relates to the Deficit Reduction Act of 2005, which expanded the state long-term care partnership program. The goal here was to reduce future Medicaid spending on long-term care services by encouraging individuals to purchase private long-term care insurance through the partnership. HB 6300 notes that the DRA of 2005 required the secretary of Health and Human Services to report annually to Congress on the impact of the state long-term care partnership program on federal and state Medicaid expenditures. HHS has failed to do this.

Pennsylvania's Long-Term Care Partnership Program is a joint initiative between the state through its insurance department and private insurance companies that sell long-term care insurance. The unique feature of a partnership policy is dollar-for-dollar asset protection equal to the long-term care insurance benefits paid by the policy. A partnership policy must include an inflation rider so that the amount of daily benefit available under the policy increases annually.

For example, you may purchase a daily benefit of long-term care of $100 with a 5 percent inflation rider. If you pay premiums under the policy for five years, the daily benefit amount would have increased to approximately $125.

A partnership policy allows an individual to preserve assets and still qualify for Medicaid. For example, I purchase a policy with a $100 per diem and a lifetime maximum benefit of $100,000. I become ill and over the course of 1,000 days at $100 per day, I reach the maximum benefit but still need care. I could qualify for Medicaid and keep $100,000 of my assets. These assets are preserved for my use and are not subject to an estate recovery claim by Medicaid when I die.

Several companies offer partnership policies in Pennsylvania, including John Hancock, MetLife, Genworth Financial and Prudential. If you purchased a policy from one of the companies after Feb. 8, 2006, the company should offer you the opportunity to exchange your current policy for a partnership policy.

All partnership policies are tax-qualified, meaning that you can claim a portion of the premium as a medical deduction if you itemize deductions and your medical and dental expenses exceed 7.5 percent of your adjusted gross income.

Next month, more on HB 6300.

Lori Cerato is a Stroudsburg attorney concentrating her practice in the area of elder law. If you would like to see a particular question covered in this column, email poconorecord.sage@gmail.com. Cerato cannot guarantee a reply to every individual's query.

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